Pep Boys Shares Plunge as Acquisition Deal Called Off (PBY)

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Auto parts retailer Pep Boys - Manny, Moe & Jack ( PBY ) late Tuesday said its planned takeover by private equity firm Gores Group has been canceled, sending its shares plummeting in aftermarket trading.

In pursuant to the terms of the terminated deal, Pep Boys will receive $50 million in cancellation fees. The company will also be reimbursed for additional merger-related expenses.

Pep Boys CEO Mike Odell commented, "Our current intention is to use our cash on hand and the settlement proceeds to pay down our term loan this year and then to refinance our senior subordinated notes in 2013."

The two companies had agreed to the deal back in January, buy Gores Group got cold feet after PBY's first quarter earnings were much lower than expected.

Pep Boys shares fell $2.64, or -24%, in premarket trading Wednesday.

The Bottom Line
Shares of Pep Boys ( PBY ) have a 1.08% dividend yield, based on last night's closing stock price of $11.09. The stock has technical support in the $8 price area. If the shares can firm up, we see overhead resistance around the $11-$12 price levels.

Pep Boys - Manny, Moe & Jack ( PBY ) is not recommended at this time, holding a DARS™ Rating of 2.9 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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